Norway throws out Freeport
Published by MAC on 2006-06-07
Norway throws out Freeport
7th June 2006
In a ground-breaking decision last week, the world's largest pension fund declared its disinvestment from two major US companies. The first is Walmart, the second is Freeport McMoran Copper and Gold (Freeport-Rio Tinto).
The latter marks the only withdrawal so far that that the Norwegian Pension Fund has made from a mining company, and the first on primarily environmental grounds.
The Fund has followed recommendations made by the country's Council on Ethics, set up soon after the socialist-labour coalition came to power last year.
The Council drew to a considerable extent on evidence provided by MAC members, burning the "midnight oil" in order to confront the counter-arguments provided by Freeport in its defence.
The Council's conclusion is unequivocal: the Grasberg mine's riverine tailings disposal threatens "ireversible" effects, posing "unacceptable risks" and creating "severe environmental damage... of importance to future generations". While the company had argued that its reclamation efforts were beginning to succeed, it had offered little or no detail to back its claims.
The importance of the Norwegian government's decision should not be underestimated, although its investment in Freeport was a fairly modest US$20,000,000.
According to recent article in the London Guardian, some foreign ambassadors have been approaching the Fund's manager "asking what they can do to get their firms off the [banned] list or make sure they don't fall on to it."
Based on the "precautionary principle" the Fund's guidelines establish a benchmark for other investors to match - and indeed for itself in future.
But the Fund has stakes in many other mining companies, including Anglo American, BHPBilliton, DRD Gold, Oxiana, Vedanta, and Rio Tinto. It was the latter's major 1995 investment in Grasberg that enabled the US company to more than double production and the unacceptable discharge of tailings into the Ajkwa river system.
Rio Tinto holds onto its 40% joint venture agreement with the company.
[Nostromo Research, June 6 2006]
Screening Norway excludes Wal-Mart, Freeport from oil fund
Reuters
6th June 2006
Norway said on Tuesday it had excluded shares in U.S. retailer Wal-Mart (WMT.N: Quote, Profile, Research) and metals group Freeport McMoRan Copper & Gold (FCX.N: Quote, Profile, Research) from its more than $240 billion oil fund for ethical reasons.
Norway's finance ministry said it was shutting Wal-Mart's shares out of the fund due to what the fund's ethical council called "serious/systematic violations of human rights and labour rights."
It said it was excluding stocks in Freeport McMoRan due to "serious environmental damage."
The Government Pension Fund -- Global, which invests surplus oil wealth in foreign stocks and bonds, was worth 1.48 trillion Norwegian crowns ($246.2 billion) at the end of March. The fund, one of the world's biggest pension funds, is managed for the government by Norway's central bank.
Norway disinvests from Freeport
Press release
No.: 44/2006
Ministry of Finance, Norway
6th June 2006
Contacts: Runar Malkenes, telephone 22 24 41 09 / mobile phone 95 21 42 83, Anders Lande, telephone 22 24 41 05 / mobile phone 48 05 33 51.
Two companies - Wal-Mart and Freeport - are being excluded from the Norwegian Government Pension Fund – Global’s investment universe.
The Ministry of Finance has excluded Wal-Mart Stores Inc., Wal-Mart de Mexico (“Wal-Mart”) and Freeport McMoRan Copper and Gold Inc. (“Freeport”) from the Norwegian Government Pension Fund – Global’s investment universe in line with recommendations from the Council on Ethics for the Fund. The recommendation to exclude Wal-Mart cites serious/systematic violations of human rights and labour rights. The recommendation to exclude Freeport is based on serious environmental damage.
- The Council’s assessments deal with issues under the Ethical Guidelines which have not been dealt with by previous recommendations, such as violations of human rights, labour rights and complicity in serious damage to the environment. The exclusions reflect our refusal to contribute to serious, systematic or gross violations of ethical norms in these areas through our investments in the Government Pension Fund – Global, says Minister of Finance Kristin Halvorsen.
- The Council’s recommendations represent a thoroughgoing piece of work which provides a good basis for the ministry’s consideration of these cases and its resulting decisions. These companies are excluded because, in view of their practices, investing in them entails an unacceptable risk that the Fund may be complicit in serious, systematic or gross violations of norms, says Minister of Finance Kristin Halvorsen.
Wal-Mart
The Council on Ethics has considered allegations that Wal-Mart is implicit in violations of human rights and labour rights in its business operations. Wal-Mart is the world’s largest retailer, posting a turnover of USD 285 billion in 2005. Point 4.4., second paragraph, first bullet point of the Ethical Guidelines, reads:
“The Council shall issue recommendations on the exclusion of one or several companies from the investment universe because of acts or omissions that constitute an unacceptable risk of the Fund contributing to: serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour and other forms of child exploitation.”
According to the Council on Ethics’ recommendation of 15 November 2005 “An extensive body of material indicates that Wal-Mart consistently and systematically employs minors in contravention of international rules, that working conditions at many of its suppliers are dangerous or health-hazardous, that workers are pressured into working overtime without compensation, that the company systematically discriminates against women in pay, that all attempts to unionise by the company’s employees are stopped, that employees are in a number of cases unreasonably punished and locked in, along with a number of other circumstances…”. The Council’s assessments encompass Wal-Mart’s business operations in the USA and Canada, and at its suppliers in Nicaragua, El Salvador, Honduras, Lesotho, Kenya, Uganda, Namibia, Malawi, Madagascar, Swaziland, Bangladesh, China and Indonesia.
The Council on Ethics summarises its recommendation as follows: “What makes this case special is the sum total of ethical norm violations, both in the company’s own business operations and in the supplier chain. It appears to be a systematic and planned practice on the part of the company to hover at, or cross, the bounds of what are accepted norms for the work environment. Many of the violations are serious, most appear to be systematic, and altogether they form a picture of a company whose overall activity displays a lack of willingness to countervail violations of norms in its business operations.”
The Council, through Norges Bank, wrote to Wal-Mart on 14 September 2005 inviting them to comment on the allegations of complicity in violations of human rights and labour rights. Wal-Mart did not respond to this letter.
The Ministry of Finance has dialogued with Norges Bank on the possibilities for exercising ownership rights as an instrument vis-à-vis Wal-Mart. In a letter of 6 January this year Norges Bank wrote that it would like to exercise its ownership rights in Wal-Mart and that this “may help influence Wal-Mart in a positive direction, while at the same time communicating important ethical considerations and principles, not only to Wal-Mart, but to other companies with similar operations, as well as other investors.”
Norges Bank also writes that at the present time “… processes are under way in relation to ethical and social conditions at Wal-Mart, and that Norges Bank is in a position to participate in several of these processes.” At the same time the bank points out that “… exercising ownership rights in a company such as Wal-Mart is a complicated matter and requires patience.”
- I would emphasise that the exercise of ownership rights is a highly important instrument under the Ethical Guidelines in terms of promoting ethical practices and long-term sustainability,” says Minister of Finance Kristin Halvorsen.
- Exercise of ownership rights is the instrument best suited to influencing companies in a desired direction. For that reason I view Norges Bank’s stance positively. The threshold for excluding companies from the Fund’s investment universe must be high. Companies’ violations of norms must be of a serious, systematic or gross nature in order for this instrument to be applied. However, in this particular case the Council on Ethics is clear in its recommendation for exclusion, and the Council views the risk of complicity in future norm violations as unacceptable. In light of the Council’s recommendation, the Ministry of Finance finds it unlikely that exercising the Fund’s ownership rights vis-à-vis Wal-Mart will sufficiently reduce the risk of the Fund contributing to ethically unacceptable conduct, as this is defined in the Ethical Guidelines. I would also recall that the Council on Ethics is mandated to monitor companies excluded from the Fund’s investment universe to determine whether a basis for exclusion still exists. In cases where a basis for exclusion no longer exists, companies may once again be included in the Fund’s investment universe.
In light of the above, the Ministry of Finance has decided to act on the Council’s recommendation to exclude Wal-Mart from the Fund’s investment universe based on the view that the Government Pension Fund – Global will incur an unacceptable risk of contributing to serious or systematic violations of human rights by maintaining its investments in the company.
Freeport
Freeport is a mining company operating one of the world’s largest copper mines in the island of New Guinea in Indonesia. Freeport uses a natural river system for tailings disposal. The Council on Ethics for the Government Pension Fund – Global has considered allegations that Freeport, through its waste management practices is inflicting extensive and serious damage on the environment.
According to Point 4.4., second paragraph, third bullet point of the Ethical Guidelines, the Council on Ethics is required to give “… recommendations on the exclusion of one or several companies from the investment universe because of acts or omissions that constitute an unacceptable risk of the Fund contributing to: … severe environmental damage…”
In its assessment of what is to be regarded as serious environmental damage, the Council on Ethics has considered whether the damage is significant, whether it causes irreversible or long-term impacts, whether it has considerable negative consequences for human life and health, whether it is a result of violations of national laws and international standards, whether the company has neglected to act in order to prevent damage or failed to put in place measures to rectify the damage and whether it is likely that the company’s unacceptable practices will continue.
Freeport employs a natural river system to dispose of close to 230,000 tonnes of tailings each day, thereby releasing large quantities of sediments and heavy metals such as copper, cadmium and mercury into the watercourse. Riverine tailings disposal has inflicted serious damage on the river system and parts of the nearby riverine rainforest and has considerable negative consequences for the indigenous peoples residing in the area.
The Council on Ethics finds that the environmental damage caused by the mining operations is extensive, long-term and irreversible. The Council notes that the authorities in many countries and key international players (the World Bank et al.) consider riverine disposal to be an unacceptable method for disposing of mine waste due to its extensive and irreversible environmental effects. To the Council’s knowledge, Indonesia and Papua New Guinea are the only countries that still allow riverine tailings disposal. While it may not be reasonable to apply Norwegian or Western environmental standards in all situations., the Council considers that lenient legislation in a country does not automatically justify a heavy environmental burden if the damage is considerable.
Freeport gives no indication of intending to alter the way the company manages waste in the future, or of initiating measures that will significantly reduce the damage to the environment, despite the fact that Freeport, in the Council’s view, has long been aware of the environmental damage caused by the company’s practices. On the contrary, the company plans to maintain production volumes in the years to come and maintains that riverine tailings disposal is the best waste management alternative.
Freeport was invited by letter of 22 December 2005 from Norges Bank to comment on the findings and on the Council’s assessments of these findings. The company replied by letter of 20 January 2006. An account of the reply is given in the recommendation. While Freeport refutes the allegations levelled at the company, it chooses not to provide evidence in support of its position.
Based on an overall assessment, the Council on Ethics concludes that the Government Pension Fund – Global runs an unacceptable risk of contributing to severe environmental damage by investing in the company. Against this background the Ministry of Finance has decided to exclude Freeport from the Fund’s investment universe under the Fund’s Ethical Guidelines.
Disinvestment
According to established procedures Norges Bank has two months in which to disinvest from a company before a decision on exclusion is made public. Norges Bank was asked by letter of 28 March 2006 to disinvest from the above two companies concerned by the end of May 2006. Disposal of stocks and bonds in the companies is now complete. As of 31 December 2005 the Government Pension Fund – Global’s investment in Wal-Mart totalled about NOK 2.5 billion. The Fund’s investment in Freeport came to about NOK 116 million at the same point in time. Publication of the decisions has been deferred to ensure an appropriate disinvestment process.
The recommendations of the Council on Ethics are posted on the Ministry of Finance’s homepage.
Read more about the Council on Ethics for the Government Pension Fund – Global at http://www.etikkradet.no.
Norway dumps Wal-Mart stock
Aftenposten, Oslo
7th June 2006
The huge fund that's meant to preserve Norway's oil wealth for future generations is pulling out of shares that don't meet the government's ethical standards. Among them is the Wal-Mart discount store chain.
Norwegian Finance Minister Kristin Halvorsen revealed Tuesday that two new stocks will be banned from the country's so-called "oil fund," which now is called the Norwegian Government Pension Fund - Global and currently is worth about USD 250 billion. It ranks as one of the biggest pension funds in the world.
The ministry reported that it's excluding Wal-Mart Stores Inc, Wal-Mart de Mexico and Freeport McMoRan Copper and Gold Inc from the fund "in line with recommendations from the Council on Ethics for the Fund."
Halvorsen's finance ministry officials cited "serious" and "systematic violations of human rights and labour rights" as its reason for pulling out of its Wal-Mart investments.
Another decision to dump shares in Freeport McMoRan was based on "serious environmental damage" incurred by the company.
Halvorsen was quoted in a government statement as saying that the exclusions "reflect our refusal to contribute to serious, systematic or gross violations of ethical norms in these areas through our investments in the Government Pension Fund - Global."
Investing in either Wal-Mart or Freeport, Halvorsen claimed, "entails an unacceptable risk that the Fund may be complicit in serious... violations of norms."Wal-Mart's offenses
US-based Wal-Mart, the world's largest retailer with revenues of nearly USD 300 billion, has been harshly criticized for its labour practices. Norway's Council on Ethics claimed that an "extensive body of material indicates that Wal-Mart consistently and systematically employs minors in contravention of international rules, that working conditions at many of its suppliers are dangerous or health-hazardous, that workers are pressured into working overtime without compensations, that the company systematically discriminates against women in pay," and that attempts to organize workers into unions are stopped.
The council's assessments involve Wal-Mart's business operations in the US and Canada and at its suppliers in Nicaragua, El Salvador, Honduras, Lesotho, Kenya, Uganda, Namibia, Malawi, Madagascar, Swaziland, Bangladesh, China and Indonesia.
The council and Norway's central bank wrote to Wal-Mart last fall, asking them to comment on the allegations of violations of human rights. The Norwegian Finance Ministry said Wal-Mart never responded.
Freeport's pollution
The Finance Ministry said that Freeport, which operates one of the world's largest copper mines on the island of New Guinea in Indonesia, is using a natural river system to dispose of 230,000 tons of tailings a day. This, claims the ministry, inflicts "extensive and serious damage on the environment" because the disposal releases large quantities... copper, cadmium and mercury into the watercourse."
The Council on Ethics found the environmental damage cause by Freeport's mining operations to be "extensive, long-term and irreversible," with "considerable negative consequences for the indigenous peoples residing in the area."
Freeport, Halvorsen's staff claimed, "gives no indication of intending to alter the way the company manages waste in the future, or initiating mearues that will significantly reduce the damage to the environment," even though Freeport's management "has long been aware of the environmental damage caused by the company's practices."
Norway's central bank (Norges Bank) also asked Freeport to comment on the Council's assessments last December. Freeport responded on January 20. "While Freeport refutes the allegations levelled at the company, it chooses not to provide evidence in support of its position," stated the Finance Ministry.
Continuing to invest in Freeport, Halvorsen said, would leave Norway's pension fund with an "unacceptable risk of contributing to severe environmental damage."
Norway's disinvestment procedures gives Norges Bank two months to disinvest from a company before a decision on exclusion is made public. It sold off about NOK 2.5 billion worth of Wal-Mart stock and NOK 116 million worth of Freeport stock by the end of May.
Norway fund closes the door on Wal-Mart
By Beate Evensen, Bloomberg News
International Herald Tribune
7th June 2006
OSLO: Norway's global pension fund, worth $242 billion and one of the biggest such funds in the world, has sold its holdings in Wal-Mart Stores, alleging "serious and systematic violations of human rights and labor rights," the Finance Ministry said Tuesday.
Over the past two months, the fund has sold its stock and bond holdings in Wal-Mart and Wal-Mart de Mexico. The holdings were worth 2.5 billion kroner, or $415 million, at the end of 2005. The fund also sold 116 million kroner worth of stock in Freeport-McMoRan Copper & Gold because of the company's "complicity in serious damage" to the environment in New Guinea, the fund said.
The fund sold its holdings in Wal- Mart, the world's largest retailer, because of "extensive" material indicating violations of the fund's ethics guidelines in areas like employment of minors and dangerous working conditions at suppliers, the fund's ethics committee said. Wal-Mart did not respond to a letter from the fund inviting the company to comment, the ministry said. Wal-Mart officials declined to comment Tuesday.
Also this year, the fund divested its holdings in Boeing, BAE Systems and Northrop Grumman, saying those companies contribute to the production of nuclear weapons.
The moves are based on recommendations from the fund's ethics council, which was set up in 2004 to halt investments in companies with activities that breach human rights, are involved in corruption or damage the environment.
"Exercise of ownership rights is the instrument best suited to influencing companies in a desired direction," the finance minister, Kristin Halvorsen, said Tuesday about Wal-Mart. "However, in this particular case, the Council on Ethics is clear in its recommendation for exclusion and the council views the risk of complicity in future norm violations as unacceptable."
Wal-Mart needs to ensure good working conditions in its suppliers' factories to protect its reputation, the company's global procurement chief, Lawrence Jackson, told analysts at a meeting last week in Rogers, Arkansas. Wal-Mart, based in Bentonville, Arkansas, is the largest U.S. private employer, with 1.3 million workers.
"We have a responsibility for any time that something happens in a facility," Jackson said. "No matter how minute the amount of product that we may have in that manufacturer, or dealing with that supplier, we're the ones that the world looks at and says, 'O.K., why is that happening?' So we have to take accountability for that."
Freeport-McMoRan, based in New Orleans, runs the world's biggest gold mine in Indonesia and one of the largest copper mines there. Freeport's operations on the island of New Guinea have been the target of protests over the disposal of tailings from mining into a river.
"Freeport gives no indication of intending to alter the way the company manages waste in the future or initiating measures that will significantly reduce the damage to the environment," the Finance Ministry said.
Freeport shares fell 17 cents to $52 in afternoon trading in New York, and Wal-Mart shares were down 12 cents at $47.07.
OSLO: Norway's global pension fund, worth $242 billion and one of the biggest such funds in the world, has sold its holdings in Wal-Mart Stores, alleging "serious and systematic violations of human rights and labor rights," the Finance Ministry said Tuesday.
Over the past two months, the fund has sold its stock and bond holdings in Wal-Mart and Wal-Mart de Mexico. The holdings were worth 2.5 billion kroner, or $415 million, at the end of 2005. The fund also sold 116 million kroner worth of stock in Freeport-McMoRan Copper & Gold because of the company's "complicity in serious damage" to the environment in New Guinea, the fund said.
The fund sold its holdings in Wal- Mart, the world's largest retailer, because of "extensive" material indicating violations of the fund's ethics guidelines in areas like employment of minors and dangerous working conditions at suppliers, the fund's ethics committee said. Wal-Mart did not respond to a letter from the fund inviting the company to comment, the ministry said. Wal-Mart officials declined to comment Tuesday.
Also this year, the fund divested its holdings in Boeing, BAE Systems and Northrop Grumman, saying those companies contribute to the production of nuclear weapons.
The moves are based on recommendations from the fund's ethics council, which was set up in 2004 to halt investments in companies with activities that breach human rights, are involved in corruption or damage the environment.
"Exercise of ownership rights is the instrument best suited to influencing companies in a desired direction," the finance minister, Kristin Halvorsen, said Tuesday about Wal-Mart. "However, in this particular case, the Council on Ethics is clear in its recommendation for exclusion and the council views the risk of complicity in future norm violations as unacceptable."
Wal-Mart needs to ensure good working conditions in its suppliers' factories to protect its reputation, the company's global procurement chief, Lawrence Jackson, told analysts at a meeting last week in Rogers, Arkansas. Wal-Mart, based in Bentonville, Arkansas, is the largest U.S. private employer, with 1.3 million workers.
"We have a responsibility for any time that something happens in a facility," Jackson said. "No matter how minute the amount of product that we may have in that manufacturer, or dealing with that supplier, we're the ones that the world looks at and says, 'O.K., why is that happening?' So we have to take accountability for that."
Freeport-McMoRan, based in New Orleans, runs the world's biggest gold mine in Indonesia and one of the largest copper mines there. Freeport's operations on the island of New Guinea have been the target of protests over the disposal of tailings from mining into a river.
"Freeport gives no indication of intending to alter the way the company manages waste in the future or initiating measures that will significantly reduce the damage to the environment," the Finance Ministry said.
Freeport shares fell 17 cents to $52 in afternoon trading in New York, and Wal-Mart shares were down 12 cents at $47.07.
Freeport objects to Norway fund exclusion
by Carole Vaporean, NEW YORK (Reuters)
6th June 2006
Freeport-McMoRan Copper & Gold Inc. said on Tuesday it believes its exclusion from a Norwegian fund because of environmental damage was a result of misinformation, and that it has a strong commitment to environmental protection in its mining process.
Noting that shareholders, financial institutions and companies are more concerned than ever with environmental and social issues, Freeport CEO Richard Adkerson told Reuters at its Global Mining and Steel Summit in New York that he was discouraged by Norway's move and by what he called misinformation about its Indonesian mining operations.
"It was discouraging they focused on the river we used to transport out tailings," said Adkerson. He said the tailings are non-toxic and contain no chemicals, nor heavy metals.
Norway on Tuesday said its more than $240 billion oil fund would no longer invest in companies it said were "serious and systematic" abusers of human rights or the environment.
The Norwegian government said it decided to exclude shares in Freeport-McMoRan from the fund for environmental reasons.
It blamed Freeport-McMoRan for using a natural river system for disposal of tailings from a huge copper mine in Indonesia.
Company spokesman, Bill Collier, said Freeport has a strong commitment to environmental protection and aims to conduct its operations with the least environmental impact possible.
CEO Adkerson said Freeport does not use cyanide or mercury in the separation process.
Instead, Freeport uses a physical separation or flotation process, in which the economically valuable minerals or metals float out, and the reagents evaporate quickly. Even a short distance from the mill, the reagents are already undetectable.
"The tailings themselves are nontoxic. They are simply ground up rock, natural rock," Collier said.
Norway's central bank contacted Freeport before taking the action to exclude the copper and gold miner.
"They did contact us. We furnished them with our information, but we feel this reflects a misunderstanding," Collier said.
Adkerson said Freeport has large demonstration projects at the Indonesian site, where it conducts comprehensive monitoring of the water in the river and the area where the tailings are deposited, including sediment, plant species and aquatic organisms, and it has never detected a problem.
In addition, Freeport hires an independent environmental consultant to run audits every three years, starting in 1996.
"We just had one published on our Web site by Montgomery, Watson, Harza, and they reaffirmed that this tailings system is the best system for our circumstances," said Adkerson."
The firm found no human health issues, said the affects are reclaimable after mining activity was complete, and the water meets U.S. drinking standards once the sediment settles.
"It has an environmental impact, but it's not toxic and it can naturally be reclaimed or can be used for farmland with appropriate nutrients added to it. And we've got demonstration projects going on right now," said Adkerson.
Behind the world's biggest pension fund
As the oil revenue keeps gushing in, a civil servant is saving it for a rainy day
Patrick Collinson in Oslo, The Guardian
22nd May 2006
It is already the world's biggest pension fund with more than $230bn (£122bn) in assets. By the end of the decade it confidently expects to be $500bn in size, dwarfing any other investment fund on earth. And this huge stash of cash is run from a fourth-floor office in a nondescript building down an Oslo side street.
What is more, its manager, Knut Kjaer, a former academic, has quietly outperformed most professional fund managers on Wall Street and in the City who earn 10, or even 20 times, his £200,000-a-year salary. Mr Kjaer is a Norwegian civil servant. His job is to manage the country's petroleum revenues and, as Norway is the world's third largest oil exporter, the money is gushing in.
Unlike Britain, which squandered most of its North Sea oil windfall on 1980s unemployment giro cheques and an inflated exchange rate, Norway had the sense to ring-fence its petrodollars into a separate fund for the future. It also has a lot more oil than Britain, pumping 3.2m barrels a day from the North Sea, against 1.9m on the British side, and could have the same amount lying untapped under the Barents Sea.
Strict orders
This year Norway expects to plough a further $50bn into the pension fund - and that for a population of only 4.5 million. Put into perspective, the fund is soon expected to equal 100% of Norway's gross domestic product. If Britain had an equivalent fund, it would be worth close to £1 trillion - about enough to pay off every mortgage, credit card and personal loan in the country. Norway has the world's highest GDP per head - £35,800 in 2005 - so it can afford to put the cash aside for the long term.
But in another extraordinary decision - and one that remains deeply controversial in Norway - not one krone is allowed to be invested inside the country. Mr Kjaer is under strict orders from the ministry of finance to put all the money overseas, with a guideline of 40% in equities and 60% in bonds.
Public scrutiny of Mr Kjaer's activities is intense. Two years ago, the government imposed a council of ethics on the fund, over which Mr Kjaer has no influence. Its first move was to ban makers of landmines and cluster bombs, so Mr Kjaer was forced to sell holdings such as Lockheed Martin, EADS and General Dynamics. In December 2005, the ban was extended to any companies involved in the production of nuclear weapons. Out went Britain's BAE Systems. The fund has had to "disinvest" from 17 companies so far. Disinvesting, or the threat of it, appears to work. Already, he says, he has had some foreign ambassadors approach him asking what they can do to get their firms off the list or make sure they don't fall on to it.
Then there is the small matter of corporate governance. The same ethical guidelines require Mr Kjaer to "actively exercise its ownership rights". The fund owns 3,200 stocks - and last year that meant voting on 20,307 resolutions. Most are routine - the re-election of directors - but Mr Kjaer is at his most active in voting against excessive pay bonuses for company executives.
Transparent
"In principle, we like linking performance and pay. But you will find us voting against the sort of deals where you see companies giving huge bonuses on historical performance. It must be real, linked to future performance and over a reasonable time horizon." He also votes against "any kind of poison pill" which halts shareholders' flexibility on takeovers and acquisitions.
So where does he invest the money? A surprising amount of it flows into British companies, despite BAE's exit: the fund's admirably transparent annual report reveals that in 2005 17.3% of the equity portion of the fund was in London-listed shares, compared to 7.4% in France, 5.4% in Germany and 3.2% in Italy.
Every single one of the fund's 3,200 holdings are listed in an appendix to the report. In Britain, his biggest holdings are a roll-call of the FTSE's giants: Shell, BP, RBS and Glaxo. In each case the fund owns about 0.5% of the company. More "active" positions include a 2% holding in Amvescap and oven maker Aga. It also owns 1% of Britvic, Baggeridge Brick, Business Post, Carillion, Detica, DTZ, Greggs, Hilton, Neteller, Premier Foods, Rank, Stanley Leisure and Sanctuary.
Interviewing Mr Kjaer is not like talking to other fund managers, who enthuse about their latest stock purchases and market themes. Their job is asset-gathering and promoting their services. Mr Kjaer's is guardianship of the nation's savings, and a gambler he is not.
He is not that comfortable about the "biggest fund in the world" tag, suggesting that perhaps Abu Dhabi is bigger. But as theirs is shrouded in secrecy, it is impossible to know. He is delighted that the average real rate of return on the fund since 1997 - taking in the worst bear market for 60 years - has been 4.5% a year after costs. Last year the fund earned 11%, one of its best returns on record, and comfortably beating his benchmark. Much of the $230bn is index-managed. The rest (20%) is actively managed, mostly by 100 sub-managers appointed by Mr Kjaer which, in London, include Gartmore, Schroders and Jupiter.
There are none of the gentlemanly three-year management contracts that the asset-management industry in London feeds off. Mr Kjaer sacks managers frequently; last year, 10% of the mandates were terminated. "It happens when key people leave. If they go over to a hedge fund, we will move our money the same day or the very next day. We don't want to be the last ones to leave."
Noruega vende valores en Wall Mart y Freeport por razones éticas*
Terra Actualidad – EFE
June 6 2006
El Gobierno noruego anunció hoy la venta de 2.616 millones de coronas (337 millones de euros) en bonos y valores invertidos por el Fondo de Petróleo en las empresas estadounidenses Wal-Mart y Freeport, debido a razones éticas.
'La venta de valores y bonos en ambas compañías está finalizada, indicó el comunicado.
La decisión se basa en las recomendaciones de un comité ético noruego que concluyó en un informe remitido en noviembre de 2005, que Wal Mart 'viola de forma sistemática los derechos humanos y los derechos laborales de sus trabajadores' y Freeport 'causa graves perjuicios al medioambiente'.
'La exclusión de las empresas refleja nuestro rechazo a contribuir a la grave violación de las normas éticas del Fondo de Petróleo', declaró la ministra de finanzas, Kristin Halvorsen.
Wal-Mart, que en 2005 alcanzó unos ingresos de 285.000 millones de dólares, 'emplea de forma sistemática a menores de edad, en condiciones de trabajo peligrosas, discrimina a la mujer y no compensa las horas extras de los empleados', según indicó el Comité ético del Fondo de Petróleo.
El Comité evaluó las actividades de Wal Mart en EEUU, Canadá, Nicaragua, El Salvador, Honduras e Indonesia, entre otros países.
Wal-Mart no ha respondido a las alegaciones noruegas.
Freeport, una compañía minera con sede en Nueva Orleans (EEUU), que cotiza en la Bolsa de Nueva York y opera en las mayores minas de cobre del mundo, en la isla de Nueva Guinea (Indonesia), 'desecha 230.000 toneladas de sedimentos y metales pesados como cobre, cadmio y mercurio al cauce natural de un río, infligiendo un grave daño al bosque tropical y al pueblo indígena', explicó el Comité.
Freeport ha rechazado todas las acusaciones aunque no ha presentado pruebas contrarias, según explica el comunicado.
El Comité Etico del Fondo de Petróleo fue establecido en 2004 con el objeto de controlar la idoneidad de las inversiones noruegas en companies extranjeras.
El Fondo de Petróleo noruego, cuyo valor en marzo fue de unos 1,5 billones de coronas (unos 193.200 millones euros) fue creado en 1996 para financiar el bienestar futuro de los noruegos y está administrado por el Banco Central de Noruega.
El Fondo había invertido 2.500 millones de coronas (322 millones euros) en la compañía estadounidense Wal-Mart, la mayor cadena de tiendas mundial, y 116 millones de coronas (15 millones euros) en la empresa minera Freeport, seg?n inform? el Ministerio de Finanzas en un comunicado.